On Monday it was announced that famed New York Stock Exchange trader Art Cashin, who was UBS’s director of floor operations for years, had passed away. While Cashin didn’t have the trading record of Warren Buffett, his wisdom shared via his daily trader notes, as well as over a couple drinks at trader saloons, was legendary. Here is a small sample of quotes from a floor trader who understood markets and investor psychology better than most:
“You do not survive in the business for 50 years if you do not find out where the exit signs are at the minute you enter a room.”
“I hope it’s only the options that expire tomorrow.”
“A rumor without a leg to stand on will find a way to get around somehow.”
“You never bet on the end of the world, that only happens once, and the odds of something that happens once in an eternity are pretty long.”
“It’s like a wax museum on the floor today. You recognize everyone, they’re all standing around, but no one’s moving.”
Regarding a low-volume trading day:
“Today is a waste of cab fare and a clean shirt.”
Regarding the Cuban Missile Crisis:
“Look kid, if you hear the missiles are flying, you buy them. You don’t sell them.”
“You buy them?”
“Sure you buy them! Cause if you’re wrong, the trade will never clear. We’ll all be dead.”
Moving on …
Art, like most Wall Street veterans, understood that a trader’s career is not made by hitting singles and doubles, but by hitting home runs. And fortunately for Cabot Options Traders, 2024 has been a big year for hitting home runs and even grand slams.
So how did we find each of these trades?
My 3 Best Trades of 2024
In the case of our Palantir (PLTR) position in July of this year when the stock was trading at 26, the stock was showing unusual strength and more importantly very strong call buying activity. This is my favorite set-up to buy as traders are giving you two bullish signals … strong stock and strong option activity.
Fast forward to December and PLTR stock is trading at 69, and our calls are at a potential profit of approximately 850%.
Next up is Walmart (WMT) which gapped up from 59 to 65 in May of this year following a big earnings beat, and in the days that followed the stock continued to tack on gains. Earnings gaps in liquid leaders are another favorite signal of mine as it means that institutions and hedge funds want in.
And while I thought WMT had the potential to rise from 65 to 75/80, somewhat shocking to me the stock is now trading at 92.5, and our calls are now at a potential profit of 550%! As I keep saying to Cabot Options Traders, who would have thought sleepy WMT would be a monster winner?!!!
And finally, in February of this year, we bought Robinhood (HOOD) based on a combination of the factors listed above as the stock soared on earnings AND attracted big call buying even after the big earnings gap higher.
Fast forward to today and HOOD is trading at a new high, and our calls are at a potential profit of approximately 760%.
And while it’s been a great year of trading, I’m not yet ready to call it a year. However, in the final hours of this year, as trading is winding down, I will think of another famous quote from Art Cashin …
“And now if you’ll excuse me, gentlemen, I believe there are some ice cubes in need of marinating.” RIP Art.
[author_ad]
